While the unemployment rate has increased from December to January, North Carolina’s unemployment funds, as of January, were nearly $2.6 billion in the hole with a reserve fund balance of about $77 million.

Randall E. Parker, an ECU economist, explained the deficit as the end result of President Barack Obama increasing the unemployment benefits through the recession. The longer the increased benefits continue to be paid out, the larger the state’s debt gets, he said.

“That’s a lot of money for the state of North Carolina,” Parker said about the $2.6 billion deficit. “… The state’s got to pay it back.”

There are two ways to pay off the debt, he said. One is to cut the benefits and the other is to increase employer taxes.

In January, there were 87,974 regular initial unemployment claims made, an increase of 25,113 from December. Fifty percent of those claimants are expected to be called back to their jobs.

Unemployment insurance benefits paid out in January totaled nearly $117 million to 127,323 claimants — an increase of 16,492 since December.

Both the state and national unemployment rate increased 0.1 percent from December to January. The state’s rate rose from 9.4 percent to 9.5 percent, while the national rate increased from 7.8 percent to 7.9 percent.

The state’s rate is down 0.1 percent from a year ago, while the national figure is down 0.4 percent from January 2012.

In North Carolina, the number of unemployed people increased by 6,243, or 1.4 percent, to 453,276 since December and by 2,634 from a year ago. The civilian labor force increased by 9,131, or .2 percent, to nearly 4.8 million.

This year’s data is based on the 2012 estimated U.S. Census population.

The unemployment increase can occur for two reasons, Parker said.

“Unemployment could be up because more people lost jobs than found them,” he said.

Parker said a second reason could be that more people re-entered the workforce. They might have given up looking for a job, and then when the economy began to look better they started looking again.

“That would be a very positive sign, in my opinion,” Parker said about the second reason.

The seasonally-adjusted non-farm industry employment increased by 15,100 to more than $4 million from December and 85,700 from a year ago. The total private sector grew by 83,000, while government jobs grew by 2,700.

Leisure and hospitality jobs saw the highest employment increase. Parker said the jobs that have increased are generally the low-skill positions. Both low- and high-skilled jobs are quicker to bounce back than the mid-level skilled jobs, he said, calling it a stratified labor market.

“History is repeating itself,” he said. “So that’s why everyone should get some skills.”

Food manufacturing jobs had the largest increase of manufacturing jobs over the month and year in January. Parker said he wasn’t sure what the reason was.

Hourly earnings for manufacturing jobs are up 18 cents, but employment has decreased and weekly hours are down.

“It may be that what some factories are doing is what’s called job sharing,” Parker said his hypothesis is.

It could be that employers are cutting back hours instead of laying off workers.

Parker said wages have not risen much for the last 12 years because of increased employer-paid health insurance costs.

“An 18 cent increase is a positive thing,” he said.

The next unemployment update with county rates will be released Friday.

Margaret Fisher can be reached at 252-559-1082 or Margaret.Fisher@Kinston.com. Follow her on Twitter @MargaretFishr.